‘The world had taken for granted the benefits of globalisation… Today we are being called upon to cope with its negative dimensions,’ prime minister Manmohan Singh told the United Nations general assembly last month. “When the world changes, we have to take notice of those changes,” he later elaborated.
Singh has been at the helm of affairs for 12 of India’s 20-year journey as an open economy — the first five as finance minister and the last seven as PM. Clearly, the man has been able to adapt India to the changes that have taken place down the years. And yet, it isn’t just his critics who assail him for how he has navigated the new economic policy he set in motion in 1991 with the triple-dose of liberalisation-privatisation-globalisation. Ideological opponents of the market see him as a protector of a corrupt corporate oligarchy, while market proponents accuse him of being a reluctant reformer who has, over the years, fallen prey to politics, splurging on welfare schemes that lead to fiscal indiscipline and corruption. Both converge to create a perception that his government is the most corrupt in history.
Reflecting on the country’s development trajectory in 2010, Singh mooted the concept of an ‘Indian model of social democratic development’, one that has been evolving since 1947. In the post-1991 phase, as the country tried to reconcile market with democracy, two stages of this evolution became visible. The watershed year is 2004 when Singh became PM. Prior to 2004, pressing on the reforms pedal had made Indian politicians so unpopular that it was unusual for a chief minister or a prime minister to hold on to power and beat the anti-incumbency bogey. Post-2004, this hasn’t been the case.
Outlining the contours of the new economic policy in his first budget speech, Singh had stated that growth was not an end in itself, but a means to reduce poverty. The immediate outcome of reforms, however, was not a reduction in poverty. What reforms did was to unleash India’s entrepreneurial spirit, creating new wealth and a burgeoning, aspiring middle-class. The poor, on the other hand, experienced reforms merely as cuts in welfare.
As the success of entrepreneurship became the primary political narrative in the mainstream media, the Indian political class lost touch with the realities, seen starkly in N Chandrababu Naidu, who declared himself as the ‘CEO of Andhra Pradesh’ and the notorious ‘India Shining’ tagline of the NDA. By 2004, it was clear that Indian voters would not tolerate reforms unless they were fine-tuned. The elections that year brought into play a fundamental question: how can reforms be made politically palatable?
The 2004 Congress manifesto addressed this question, suggesting answers that would later resolve the ethical and tactical dilemmas a politician faces while ‘selling’ reforms. This was a new social contract that implied the following: growth would continue to be pursued, but the pace would be calibrated. Those who can’t directly benefit from this growth could depend upon new welfare schemes for employment, health, education, old age, scheduled caste-scheduled tribe status.
Reforms no longer meant misery for the masses. In fact, it created a new triumvirate: more growth, more welfare, more votes. Singh, as a member of the Congress manifesto committee and then as prime minister, was a key influencer of this course correction that cynics derided as ‘bribing the voters’ and ‘the cunningness of capitalism’.
While welfare touched the lives primarily of those excluded from the market, new tensions were emerging among those who are linked to the market but in inequitable ways. Singh identified them and was bold enough to flag these markers in a speech at the Confederation of Indian Industry (CII) in 2007. He first quoted JM Keynes: “If the rich had spent their new wealth on their own enjoyments, the world would long ago have found such a regime intolerable,” adding his own words, “The electronic media carries the lifestyles of the rich and famous into every village and every slum. Such vulgarity insults the poverty of the less privileged… and it plants seeds of resentment.” He suggested a remedial 10-point social charter, emphasising the welfare of workers and weaker sections of society.
Singh’s fears of such resentment are real. Maoists have flourished in areas populated by tribals who have been expelled from their land for industry; industrial workers around urban centres like Delhi, squeezed by inflation, have joined social activist Anna Hazare’s war cry against parliamentary democracy. The challenge before Singh — and the Indian model of social democracy — is how to deal with the strains caused by uneven capabilities and exploitative structures that do not respect the Keynesian spirit.
Sustaining a political constituency is fundamental to the success of the market. In the last 20 years democracy, far from growing impotent, has been able to force changes. Singh understands this and has responded creatively to this context. As in the market, in politics too, only the fittest survive. As has Manmohan Singh.